Boeing 747 Program May Have Just Earned a Reprieve

A huge order from United Parcel Service will boost sluggish sales and might offer a stay of execution for production of the iconic jumbo jet.

The writing appeared to be on the wall.

With orders dwindling and production falling to a fraction of historic rates, the Boeing 747 program looked to be headed towards a slow and ignoble death just a few short months ago. In June, Boeing officials confessed to regulators that there might not be a future for the aircraft once dubbed “The Queen of the Skies.”

“The combination of production challenges, change incorporation on early build aircraft, schedule delays, customer and supplier impacts and changes to price escalation factors has created significant pressure on program profitability,” company officials warned in an SEC filing less than four months ago. “If we are unable to obtain sufficient orders and/or market, production and other risks cannot be mitigated, we could record additional losses that may be material, and it is reasonably possible that we could decide to end production of the 747.”

A just-announced deal with United Parcel Service (UPS) however, represents a dramatic turn of fortunes for the struggling 747 program. According to Boeing, UPS has ordered 14 new 747-8 Freighters with an option to purchase 14 addition jumbo jets in the future. This order alone far exceeds the three total 747 orders Boeing previously recorded so far this year.

“UPS could not have selected a better aircraft to meet its growing business needs,” Boeing Vice President Brad McMullen said in a statement announcing the order. ”We’ve continued to make the 747-8 Freighter even better, and we look forward to seeing UPS introduce it to its fleet.”

UPS plans to use the new aircraft for what is being described as a “cascade of aircraft-route reassignments.” UPS CEO David Abney told investors this week that the company plans to add capacity to its busiest routes with a focus on international service. “UPS is making several strategic capital investments for increased global operating capacity,” he confirmed to The Chicago Tribune earlier this week.

“These aircraft are a strategic investment for increased capacity for UPS customers around the globe,” UPS Airlines President Brendan Canavan explained. “The 747-8 will allow UPS to upsize our network in both new and existing markets.”

[Photo: Boeing]